Frontier Airlines 2010 Annual Report Download - page 154

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Direct Cost model and with the prudent operation of its business to minimize its costs to operate the Aircraft in
accordance with this Agreement. Operator and Delta each agree to notify the other as soon as reasonably practicable
of any anticipated or potentially substantial change of cost or operational performance.
(iv) 2017 and 2018 Base Rate Costs. Subject to the potential adjustments of the Base Rates Costs with respect to
Airframe Maintenance, Engine Consumables and Depreciation (parts and engines) as contemplated by Section 2(B)
below, the Base Rate Costs for 2017 and 2018 shall be determined by multiplying the Base Rate Costs in effect for
the immediately preceding calendar year (e.g calendar year 2016 for establishing the Base Rate Costs for calendar
year 2017) by a percentage equal to the sum of [*] plus the applicable CPI Change plus [*].
(v) CPI. For all purposes of this Amendment, the “CPI Change” to apply in determining a particular calendar year's
(the “Target Year”) Base Rate Costs as contemplated in Clauses 2.A. (ii), (iii) and (iv) above shall be calculated by
taking the percentage change of the average CPI from the calendar year that is two (2) years prior to the Target Year
to the average CPI from the calendar year prior to the Target Year (as determined pursuant to the first paragraph of
Section 3.G. of the Agreement) (e.g. the CPI Change to be applied to determine the 2017 Base Rate Costs shall equal
the percent difference between the average CPI for 2016 and the average CPI for 2015); provided, however, in no
event shall the CPI Change exceed [*] with respect to any Target Year.
(vi) 2009 and 2010 Payments. Each of the parties acknowledges and agrees that with respect to calendar years 2009
and 2010 the amounts paid by Delta to Operator as of the Amendment Number 3 Effective Date in exchange for the
flying and operation of the Aircraft by Operator during such calendar years represent full and final satisfaction of any
amounts owed by Delta to Operator in exchange for the flying and operation of the Aircraft by Operator during such
calendar years; excluding, however, amounts owing, if any, with respect to (a) the potential Monthly Incentive
Compensation with respect to Operator's flying and operation of the Aircraft during February 2010 and December
2010, (b) the potential Semi-Annual Incentive Compensation with respect to Operator's flying and operation of the
Aircraft during the six-month period between July 1, 2010 and December 31, 2010 and (c) final reconciliation, as
contemplated by Section 3.E. of the Agreement, of Operator's December 2010 operations and Operator's 2010 Pass
Through Costs and associated Mark-Up (if any).
B.
Maintenance Sourcing. Delta and Operator mutually covenant and agree to jointly solicit proposals from one
or more third parties to provide Airframe Maintenance (parts and/or labor) for the Aircraft (each, a
“Maintenance Sourcing Proposal”); provided, that Operator shall be under no obligation to so solicit any such
p
roposals to the extent any applicable service or part with respect to the Aircraft is the subject matter of any
binding agreement to which the Operator is party as of the Amendment Number Three Effective Date.
Operator shall provide Delta with all commercially reasonable information required by Delta in connection
with any Maintenance Sourcing Proposal, including but not limited to, inventory levels, current modification
status, and component reliability history. If any Maintenance Sourcing Proposal results in an agreement being
entered into by Operator or Operator independently enters into any agreement with a third party to provide
Airframe Maintenance (parts and/or labor) for the Aircraft after the Amendment Number Three Effective
Date (each, a “Maintenance Sourcing Agreement”), the Base Rate Costs with respect to Airframe
Maintenance, Depreciation and/or Engine Consumables, as applicable based on the scope of the applicable
Maintenance Sourcing Agreement, shall be reduced by an amount equal to the total cost savings realized by
Operator pursuant to such Maintenance Source
*Confidential
3